By Avi Salzman
Data centers are supercharging electricity demand growth in Texas, potentially quadrupling total power consumption by 2032, according to a new report from the state's grid operator.
That number is inflated and almost certainly won't come to fruition. But the report highlights just how central Texas has become to the data center world.
Texas has abundant natural gas and is adding renewable energy faster than any other state, making it attractive to power-hungry data centers. It also passed a law laying out rules for data center developers to arrange for their own power supplies, putting it ahead of other states whose rules are still being worked out.
The growth in power demand is poised to benefit utilities in the state that will be building out the lines for companies, and independent power producers that own gas plants and renewable installations. Potential publicly traded beneficiaries include Sempra, CenterPoint Energy, AEP, NextEra, NRG, Vistra and Constellation Energy.
ERCOT, the Electric Reliability Council of Texas, operates the state's grid. On Wednesday, ERCOT released a forecast for load growth on the system, saying that electricity demand could surge to over 367 gigawatts by 2032, up from ERCOT's peak load of 85.5 gigawatts, which occurred in August 2023. Adding that much electricity would entail building as much power capacity as is produced by 300 large nuclear reactors.
It's important to put these numbers in context, because they are so large as to seem comical. The forecast is clearly inflated by speculative data center projects that will never materialize. Data centers make up 228 gigawatts worth of the projected 2032 demand increase. Companies put projects in the regulatory queue that don't yet have financing or regulatory approvals, so that they can try to secure a spot in case they're able to build in the future, executives in the industry say.
"That's not gonna happen," said Robert Gaudette, incoming CEO of power producer NRG, in an interview with Barron's last month, referring to ERCOT's load growth estimates. The 367 gigawatt number includes data center proposals that are still extremely speculative. For context, there are around 10 gigawatts worth of data center projects under construction today, according to ERCOT. And some data center projects have already started to get pared back as companies struggle to secure power or regulatory approval.
Nonetheless, Gaudette and others expect data centers to flock to Texas and utilities will benefit. NRG has a partnership with GE Vernova to build power plants, which could end up being placed in several parts of the country. Gaudette expects many of those plants to end up in Texas.
"Texas is going to get more than its fair share, because it's a 'get things done' state," he said. "You can get data centers built, you can get power plants built, and they are a little bit ahead on the regulatory structure."
Write to Avi Salzman at avi.salzman@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 16, 2026 13:10 ET (17:10 GMT)
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